A Choppy Trade in Grain Markets

Soybeans

Tuesday’s Recap
May Soybean futures settled at 1012’6 Tuesday, off by 2’6, in lower trade across the board. Overall, a light 188,413 contracts were traded, with 100,675 done in May. Combined open interest increased 7,115 (0.86%) to end the session with 830,800 outstanding. The May maturity rose 0.76%, or 7,115, to finish at 376,065.

Technicals
A choppy sideways trade has been the path of least resistance so far in this week’s trade, keeping technical levels intact from yesterday’s report. We wish there was something more exciting to say here, but with a narrowing trading range there’s not much to say that hasn’t been said this week. We have mentioned liking November beans a little bit more on a longer-term time frame as a potential market that could surprise. With volatility relatively low we like looking at calls and call spreads for some limited risk exposure in the event that there is an event between now and harvest that sparks some excitement. If you’d like to discuss strategies that may be suitable for you, please contact the trade desk.

Technical Levels of Importance
Resistance: 1024-1030 1/4***, 1036 1/2-1042****
Pivot: 1008-1013
Support: 991-995 3/4****, 977 1/4**

Popular Options
Option trading centered around the April 1020 calls with 1,746 traded and the April 1000 puts with volume of 2,263. In May options, the high volume call was in the 1030 strike with 1,378 changing hands, and the 1020 put leads with volume of 2,044. Options with the highest open interest are the Nov 1200 call with 15,430, and the May 1000 put with 17,580.

Volatility Update
As measured by SVL, implied volatility finished the day moderately lower, down 0.22 to close at 18.15. The 30-day historical volatility ended down by 0.89% to a one month low of 15.57%. The SVL Skew was sharply higher with the 30-day up 0.14, closing at 0.35.

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